On April 24, the Reserve Bank of India revoked Paytm Payments Bank’s banking license. Following the development, the company One97 Communications share price slipped about 7 percent. However, this development was not a sudden occurrence; it was the culmination of regulatory developments spanning over 4 years.
It started in March 2022, when the central bank prohibited Paytm Payments Bank from onboarding new customers. Later in 2024, the RBI prohibited Paytm Payments Bank from deposits or credit transactions or top-ups in any customer accounts, prepaid instruments, wallets, FASTags, National Common Mobility Cards, etc.
This gave Paytm and its parent company, One 97 Communication, enough time to prepare for the eventuality. And the company did prepare well for this. After the RBI’s action on Paytm Payments Bank 2024, Paytm parent company One 97 Communications moved to separate its core operations from the entity, ensuring its payments and financial services businesses operate independently.
Adopting multi-bank model
Post the regulator’s action in 2024, Paytm transitioned to a multi-bank model for its UPI services, partnering with leading banks to ensure uninterrupted payments for its users.
This structural separation has since emerged as a defining factor in Paytm’s recovery, with both operational performance and analyst commentary indicating limited spillover from PPBL into its core business.
The company also reiterated that all its services, including Paytm QR, Soundbox, card machines, payment gateway, and wealth offerings, continue to operate without disruption.
Brokerages on cancellation of Paytm Payments Bank’s license
Brokerage firms have highlighted that the company’s early distancing from the payments bank helped preserve business continuity and provided clarity on governance.
Bernstein noted that there is no immediate impact on the core business, given the severance of ties between Paytm and PPBL. Bank of America said Paytm “had decoupled itself from PPBL & revamped its business model & doesn’t have any exposure/ material biz arrangements to PPBL,” adding that “the current business of Paytm isn’t impacted by the ban.”
Jefferies also highlighted that the cancellation of Paytm Payments Bank’s license has a limited impact on Paytm, noting that key steps, including the wallet shutdown, UPI migration, and termination of agreements, had already been completed.
“We also preview Paytm Q4FY26 earnings, where we have seen continued gains in both consumer and merchant market share,” Goldman Sachs said, underscoring improving business traction following the regulatory developments.
Sustained momentum
Paytm parent company’s revenue has shown consistent growth, rising from Rs 1,918 crore in Q1 FY26 to Rs 2,061 crore in Q2 and Rs 2,194 crore in Q3, indicating steady expansion across payments and financial services distribution.
Profitability has also strengthened, with Paytm reporting profit after tax of Rs 123 crore in Q1, Rs 211 crore in Q2, and Rs 225 crore in Q3, marking multiple consecutive profitable quarters.
Meanwhile, Paytm’s consumer engagement has also strengthened, with monthly transacting users reaching 7.6 crore and UPI market share continuing to rise.